A man holding an umbrella is silhouetted as he walks in front of an electric monitor displaying the Japanese yen exchange rate against the U.S. dollar and Nikkei share average in Tokyo, Japan July 14, 2022
A man holding an umbrella is silhouetted as he walks in front of an electric monitor displaying the Japanese yen exchange rate against the U.S. dollar and Nikkei share average in Tokyo, Japan July 14, 2022 Reuters / ISSEI KATO

A global gauge of stocks climbed on Tuesday as equities rallied while the dollar was down for a third straight day as the door was opened for the European Central Bank to enact a bigger rate hike than expected this week.

Stocks on Wall Street advanced in broad rally, joining their European counterparts, with each of the 11 major S&P sectors climbing as the U.S. corporate earnings season heats up.

Johnson & Johnson shares gained 0.20% after posting results that beat expectations but cut its full-year outlook, citing a stronger dollar.

"Johnson & Johnson came out and beat on all the lines today, so we are getting in the middle of this earnings season, some reports that suggest things are OK," said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

"We are in this trading range, you are going to have days where everyone is going on a bargain-hunting spree."

The Dow Jones Industrial Average rose 522.31 points, or 1.68%, to 31,594.92; the S&P 500 gained 74.31 points, or 1.94%, to 3,905.16; and the Nasdaq Composite added 241.99 points, or 2.13%, to 11,602.04.

Equities finished well off their highs on Monday and stocks on Wall Street ended lower after a report that Apple planned to slow hiring and spending growth next year caused a bout of profit taking.

The pan-European STOXX 600 index rose 1.47% and MSCI's gauge of stocks across the globe gained 1.56%.

A Reuters report that the European Central Bank (ECB) was weighing a 50 basis points rate hike at its Thursday meeting, bigger than the 25 basis points hike many market participants had priced in, helped put the euro on track for its biggest one-day percentage gain in nearly two months.

Easing expectations that the U.S. Federal Reserve would resort to a 100 basis points hike at its meeting next week put the U.S. dollar on track for its third straight session of declines after touching a two-decade high last week.

The dollar index fell 0.828%, with the euro up 0.99% to $1.0241.

Benchmark 10-year notes last fell 13/32 in price to yield 3.006%, from 2.96% late on Monday.

Along with the ECB, the Bank of Japan is also scheduled to meet on Thursday, though not much is expected from the extremely dovish central bank.

Crude prices were slightly lower in volatile trading, a day after settling about 5% higher, as concerns over a possible recession that could weigh on demand were offset somewhat by tight supplies.

U.S. crude recently fell 0.56% to $102.03 per barrel and Brent was at $105.80, down 0.44% on the day.